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This year’s hottest tech IPO may be a transportation company

One standout fact about Cainiao is that it is the second-largest contributor to Alibaba’s profit growth, despite accounting for just 9.2% of group revenue. Punching above its weight within the Alibaba empire is what makes the logistics company the perfect choice to lead the coming parade of IPOs

September 29, 2023 / 12:20 IST
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The next big deal may reignite interest in IPOs because of a unique set of traits.

Share debuts among technology companies haven’t inspired confidence this year, with two of the largest offerings sliding below their listing prices within the first week. The next big deal may reignite interest in IPOs because of a unique set of traits.

Cainiao Smart Logistics Network Ltd is nominally considered a technology company, chiefly because it’s a spinoff from Chinese e-commerce giant Alibaba Group Holding Ltd. But it’s no more tech than FedEx Corp or ZTO Express Cayman Inc, which also use software and hardware to optimise the very manual job of delivering packages.

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That distinction may not matter, though. Cainiao’s proximity to the mothership allows the affiliate to bathe in the technology glow, while being distant enough from Alibaba’s own macroeconomic challenges to warrant consideration by global investors. It’ll need all the buzz it can get; Cainiao is set to become the first of five group companies to pursue an independent equities-market listing.

A reported $1 billion share sale in Hong Kong would put the debut below this month’s listing of chip designer ARM Holdings Plc ($5.3 billion) and above that of grocery-delivery provider Instacart ($660 million), both of which were widely anticipated and posted massive first-day jumps before dropping beneath their sales prices. The latter’s collapse serves as a particular note of caution given the San Francisco-based company is also, first and foremost, a wheels-and-boots business like Cainiao.